Payment Platforms Reduce Fraud and Paperwork in the Affordable Segment

Handling rent payments has always had unique challenges in the low-income housing market, causing additional administrative burden on top of already-complex housing rules and regulations.

• Property managers typically receive rent via money orders in the office, sometimes in multiple payments if rent is above $500, and manually post.
• Paying rent in person at the leasing office means residents have to get there during regular business hours which can be challenging. Properties are moving away from using drop boxes due to the increased risk of fraud and theft they bring.
• If part of the rent goes to a HUD repayment agreement, the staff may have to manually divide the payment in the books.

The process costs time and money, and creates administrative headaches, for the resident and property. But the affordable market is taking a page from the conventional housing sector, where receiving non-paper payments is commonplace. Integrated payment platforms now allow property management companies in the affordable sector to accept multiple types of online payments and to manage the complexity of these programs.

Freeing up administrative time and creating a better renter experience

The trip to the leasing office is a ritual of sorts that has historically been valued as enabling the property and resident to get at least one face-to-face meeting each month. With resident touch points so critical in this day and age, some property managers have been reluctant to make the change to online payments for fear they won’t see their residents as often, Ford says.

That doesn’t have to be the case. In fact, taking care of business electronically frees up administrative time to engage with residents in a setting that doesn’t involve exchanging money. And, they provide a new reason to stay connected to residents.

“One of the things I try to drive home with our clients is that there are other ways to promote contact with your residents,” Ford said. “You don’t necessarily have to use this one time a month as a way to interact with your residents. Many properties are using community events as a time to bring residents together instead.”

Adding a layer of protection from money order fraud

Paper money orders are a common and growing means of paying rent, especially in the affordable segment.  Although this payment method may sound simple, it brings not only increased opportunity for fraud and theft but can also create additional expense for both property managers and residents.

“At the very least, residents who have to purchase multiple money orders may end up paying more than necessary says RealPage Industry Principal Jeremy Ford. “The resident is buying them from a retailer and physically taking them back into the property manager’s office where the check or money order is scanned into the system. In that case, the property management company also pays for multiple transactions to process those money orders, so it’s a larger expense.”

Solutions such as RealPage’s Resident eMoney Order provide a payment channel that helps reduce paper and manual transactions in the office while significantly reducing the opportunity for fraud and theft related to money orders.

The process works like this: The resident goes to retail store such as Walmart with a payment coupon specific to their property and resident account. The retailer follows instructions on the coupon, which includes a unique identification number for the resident. Instead of buying a money order to take back to their site manager, they pay cash to the retailer for their rent.

The transaction is immediately posted to the community’s property management system and applied to the resident’s balance due.

Accepting this type of payments removes the paper money order from the office and frees onsite staff from having to scan in transactions.

The process also reduces the incidence of money order fraud, which is growing.  When money orders are left in the office for processing, its essentially the same as having cash for everyone to see. And that can create an opportunity for fraudulent activity.

“You can take a money order with the name filled out, scratch off the name, put in your own name and all of the sudden you have $500 extra dollars,” Ford says.

Dishonest renters can take it a step further. Today, it’s easier than ever to produce phony money orders and personal checks. Last year, the Federal Trade Commission warned that counterfeit scams are on the rise.

Easier management of HUD repayment agreements

The manual process of certifying residents for HUD assistance has always been burdensome for affordable property managers, and HUD repayment agreements are no exception.

Ford says the big win for affordable properties is in having a system that automates management of HUD’s stringent repayment agreement program.

“This functionality allows the property manager to scan a check or money order and easily allocate payment between the resident ledger and HUD repayment ledger,” Ford said.  “It’s a big time saver.”

The luxury of engaging residents on a different level

Removing paper from the office is a benefit, Ford says, but he realizes some property managers are concerned that they won’t see their residents as often. With in-person payments, managers know that the resident is going to come into the office at least once a month to drop off a check, and they’ll have an opportunity to make a connection.

“That’s a big thing,” he said. “There are some property managers who look at rent payment time to have contact with their residents, especially in senior affordable markets.”

But when properties are able to get payments out of the office and spend less time processing payments, the front office can get a little more creative at engaging residents.

That’s something property managers may not have had the luxury of until now.